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Attachments: Trading what moves the market - NZD/USD
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Trading what moves the market - NZD/USD

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  • First Post: Jul 16, 2013 11:52pm Jul 16, 2013 11:52pm
Hello. This is ment for the forex rookies that are currently studying TA and feel like they aren't going much further forward. The FX market moves up with buyers and down with sellers like any other. We are interested in how to get long before others push price up and/or how to sell before others so we can profit from falling price. Finding clusters where an overwhelming area of orders are present is what we're looking for to enter or exit our trade and where to base our stop-loss. Lets start with retail broker Oanda showing their client's orders & positioning. (this is not 100% accurate as its a fractal view, anyone could chage their order at anytime, and it is an UNcentralized market.. get used to it) There are order news & rumor sources online.

The Setup:
Attached in the Nzd/Usd order setup found on http://fxtrade.oanda.com/analysis/fo...r-book#NZD/USD along with those orders marked on the N/U 4hr price chart:
We have large sell orders at .8150 and right above .8200, along with buyers under the market .7620-.7700, with some sell stops under the lows.

Execution:
There are 3 basic confirmations to pay attention to.
1. Nzd/Usd in one of these zones, ready to trade a break or rejection of these levels.
2. Trade must be in line with market sentiment (longing based on a positive projected outlook, short on negative)
3. Nzd/Usd does not have the volume to move the market like the majors have, but follows Aud/Usd very closely bc of geographical proximity and both have the 2 highest interest rates of the majors. Our 3rd confirmation is on the Aud/Usd chart upon trade time so the need to follow Aud news/data is strong as well.

So guys, any trade ideas based on this information? Where do you see the best potential trades based on this info (entry,SL&TP levels)? Please no posting or using confirmation from indicators that are derived from price.
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Here's the Aud/Usd 4hr chart with round numbers marked where we'll initially look for confluence. There are limit orders at those lines and we can assume there are sell stops under the lows as the retail market is long Aud/Usd.

Trading homework: search online to find any order info, rumors, and important upcoming data releases for Aud and Nzd that may affect price.
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Updating the charts. Nzd orders are still valid.

Some bad news today about contamination of milk powder from NZ, which is a big deal as dairy is by far their largest export.

Aud has been hit with not-so-good news as well, with of traders pricing in a 91%(highest yet) chance of a 25bps cut for the Aug 6th RBA rate update.
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Quoting EmeraldEyes
So guys, any trade ideas based on this information? Where do you see the best potential trades based on this info (entry,SL&TP levels)? Please no posting or using confirmation from indicators that are derived from price. {image} {image}
Hi! I just found your thread. I hope you come back as I want to learn this type of trading. To answer your question - I would sell it when it hits the stop's of the buyers at that red zone. Right?
Hey, thanks for posting! The 2 red zones up top are clusters of sellers, there are buy stops above those highs (right under the red zones) so I'd expect to see price rise fast, trapping longs, and sellers will take advantage. Where would you enter, and where would your stop and TP levels be?

The levels on the chart are half of it though. When price rises in to the sells, there has to be some negative news looming (RBNZ talks of a rate cut, for example) and the same if price drops to the buyers. In the meantime, while Nzd is in this range, let's keep up on New Zealand news or Usd news that may affect the sentiment of this pair. Lately when the Fed mentions taping 'soon' it's been bad for the higher-yielding majors like Aud and Nzd.
Quoting EmeraldEyes
Hey, thanks for posting! The 2 red zones up top are clusters of sellers, there are buy stops above those highs (right under the red zones) so I'd expect to see price rise fast, trapping longs, and sellers will take advantage. Where would you enter, and where would your stop and TP levels be?
I honestly have no idea. Do I need to read DS's book?

Quote
The levels on the chart are half of it though. When price rises in to the sells, there has to be some negative news looming (RBNZ talks of a rate cut, for example) and the same if price drops to the buyers. In the meantime, while Nzd is in this range, let's keep up on New Zealand news or Usd news that may affect the sentiment of this pair. Lately when the Fed mentions taping 'soon' it's been bad for the higher-yielding majors like Aud and Nzd.
Ok.
No, you dont have to read a book. You'll want to sell in to the red areas, pending poor nzd/positive usd news. You can do half the trade in the first red and half the 2nd box if price goes there, or wait for price action confirmation like a trendline break on an intrday chart in that area. Theres so many ways to enter, whichever feels comfortable.
Thanks Emerald. Only news I have is for USD. Looks like Wholesale Inventories came in worse than expected...
Get a feel for what the market expects from Nzd and Usd by reading up on the latest news. The major headlines have been Fed tapering which is USD positive and talk from RBNZ saying the Nzd is still overpriced, room to devalue further, then their exports are now going to be hurt bc of Fonterra as well.
Wholesale inventories, unless horribly wrong, won't affect the market too much. Look for big news or an important data release when Nzd is up in the red areas.
I really like this uptrend for a short opportunity soon. The traders that have been trading with the trend/breakout are all in on it, with their stops at breakeven or under recent lows. This can accelerate a down move as it did an upmove this time, from shorts exiting.. helping price move up.
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Quoting EmeraldEyes
I really like this uptrend for a short opportunity soon. The traders that have been trading with the trend/breakout are all in on it, with their stops at breakeven or under recent lows. This can accelerate a down move as it did an upmove this time, from shorts exiting.. helping price move up. {image}




Emerald
Really appreciate the thread! I have DS's book. I've tried to trade in a similar fashion but I trade the currency futures- primarily 6E. I often look for lows/highs to be taken out to stop out retail traders, but I feel like I'm missing an important piece of the puzzle. Is there a way to see open and current orders on the 6E? I've used cumulative delta with mixed results. Thanks for any tips!
Also, today was a good example on 6E. The lows kept getting taken out on the 1 and 5 minutes charts. On the 15 and 1 hr there was a major downtrend. I got stopped out a couple times trying to call the bottom and get long.
Good call on the NZDUSD; on 4-hour it seemed too obvious for a reversal at the first test of the yellow box, but it did drop 100 pips.

Would you still sell on the chart below? Is is too late?

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With each conspiracy, i add a new layer to my hat.
Quoting jack411
{quote} Emerald Really appreciate the thread! I have DS's book. I've tried to trade in a similar fashion but I trade the currency futures- primarily 6E. I often look for lows/highs to be taken out to stop out retail traders, but I feel like I'm missing an important piece of the puzzle. Is there a way to see open and current orders on the 6E? I've used cumulative delta with mixed results. Thanks for any tips! Also, today was a good example on 6E. The lows kept getting taken out on the 1 and 5 minutes charts. On the 15 and 1 hr there was a major downtrend....
I'd prefer futures over spot. /6E is the futures of Eur/Usd essentially. Since the futures market is centrallized, your broker should give you Time & Sales and some DoM(Depth of Market). Since trading spot, I only have round numbers, Pivot Points, and a couple popular MAs on the chart to see what others do.

Since Friday and the start of the week, USD has been strong. What I heard on CNBC so far is Fed Tapering soon and Greece needs more $$ a down week is not too much of a surprise. The strategy of the week has been to sell rallies and ride the dollar strength. German & French prelim GDP out in a few hours, Euro Flash GDP after that, a German bond auction as well. These can change the tide in E/U if all come in better-than-expected.
Quoting Tin-Foil-Hat
Good call on the NZDUSD; on 4-hour it seemed too obvious for a reversal at the first test of the yellow box, but it did drop 100 pips. Would you still sell on the chart below? Is is too late? {image}
No trades have been taken on Nzd/Usd. This drop has been from buying of the US Dollar as the same trend is seen on all Usd pairs. I wouldn't enter short here. I'd wait until price broke June 14th's high of .8140 before going short.
Quoting EmeraldEyes
{quote} I'd prefer futures over spot. /6E is the futures of Eur/Usd essentially. Since the futures market is centrallized, your broker should give you Time & Sales and some DoM(Depth of Market). Since trading spot, I only have round numbers, Pivot Points, and a couple popular MAs on the chart to see what others do. Since Friday and the start of the week, USD has been strong. What I heard on CNBC so far is Fed Tapering soon and Greece needs more $$ a down week is not too much of a surprise. The strategy of the week has been to sell rallies and ride...


So would the Time&Sales info or the DOM be what I would want to look at for the open orders and clusters of stops as you showed in your examples above? The only experience I have with trading off the DOM is very limited. I was l looking for an "open orders summary" like you have pictured above but couldn't find anything when I was trading today.
I'm not sure, you'll have to ask some experienced futures traders. I personally don't use DoM or T&S as I still trade off spot.

If you have access to DS's chat, go on there during the US session. Those guys trade futures.
Trade Setup, Short @ .8150 w/ 2/3rd position, Short @ .8210 w/ 1/3rd of position. Stop @ .8315

No major news coming out of Nzd this week, a little from Usd. I expect the Fonterra milk incident to be reflected in upcoming data though, and the market to long the Usd as the Fed is set to start tapering. If Fed does not taper, or announces they are tapering next year instead of this one, there'll be a dollar sell-off. In that case, I plan to close out positions as well.
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Trade looking solid EE. You didn't point out the target in your write-up there, but I'm assuming you're looking for .7700?

Meanwhile, regardless of whether you're in loss or in profit, if tapering isn't in September like expected, exit the position and re-assess everything? Sounds spot on to me.
Oh, and on a related note to the tapering news - watch US bond yields as well since they're the middleman between the tapering and USD strength.
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